London-based oil-mercenary company marches into Libya

Oil and private military/mercenary company Heritage has muscled its way into Libya. The London-based oil company is the first new foreign oil company to buy its way into Libya, after acquiring a controlling 51% stake in Sahara Oil Services – which apparently brings the right to bid for and operate oil and gas licenses in the country.

Heritage has a controversial path of moving into conflict zones and countries ridden by civil war. CEO Tony Buckingham – himself a former mercenary – describes this as “a first mover strategy of entering regions with vast hydrocarbon wealth where we have a strategic advantage.” In other words, by entering resource-rich regions while guns are still blazing, Heritage can secure excessively profitable deals.

The company is repeating this strategy in country after country. Its drilling on Lake Albert between Uganda and Congo (DRC) exacerbated conflict between the neighbouring countries, including a Ugandan military raid that killed Congolese civilians on a passenger ferry. PLATFORM reports calculated that Heritage’s contracts in both Uganda and Congo were unfairly biased and transferred billions of dollars of state revenue to private companies. Heritage is now trying to dodge $400 million in capital gains tax by taking Uganda to arbitration. A similar process in Iraq saw Heritage signing deals in Iraqi Kurdistan while the central government was declaring them illegal.

Heritage’s early deal in Libya seems to have followed the same pattern. The company dispatched ex-SAS officer John Holmes to Benghazi soon after the war began, to build relationships with the NTC opposition. Senior rebel – now government – officials reported that Holmes had made proposals that Heritage use its mercenary experience to prvide “oil field security” in Libya. The company also lobbied Britain’s Foreign Minister William Hague – after a meeting in the elite Carlton Club – for support in gaining a mercenary contract.

While these proposals were rejected, Heritage’s purchase of Sahara Oil Services gives it a foothold in the country. Controversies continue, with the two most senior oil officials in the Libya’s new government claiming they were not informed over the company’s acquisition, and Libya’s former oil head Shokri Ghanem arguing that the transfer of licenses to a new foreign player would require approval from the ministry of economy.

But Heritage clearly hopes that its combination of mercenary skills and backroom diplomacy will allow it to make another contract coup. Phil Corbett of the Royal Bank of Scotland commented that “we are inclined to see Heritage’s move positively.”